Starting next year, the USPS will lower its service standards, which will slow down mail delivery—a move that will “virtually eliminate overnight delivery—including first-class mail from one address to another within the same city or town,” according to a statement released by the American Postal Workers Union, one of four postal workers unions taking part in Friday’s demonstrations.

The workers gathering at the USPS’s final Board of Governors meeting of the year in Washington, D.C., and at dozens of other locations, will also protest the planned closure or consolidation of 82 mail processing and distribution centers. The APWU notes in its release that more than 140 plants have closed since 2012.

The postal worker unions say that the cuts will cause hardships for customers and irreparable harm to the U.S. Postal Service while contributing to a “flawed management strategy” that has “failed to address the cause of the Postal Service’s manufactured financial crisis.”

The case dates back to June 2013, when Lauren Ballinger, who interned forW Magazinein 2009, and Matthew Leib, who interned atThe New Yorker in 2009 and 2010, sued the publisher for allegedly violating labor laws by paying them the equivalent of less than $1 per hour. At the time it was filed, the case was part of a wave of similar suits over unpaid internships filed against high-profile media and entertainment employers such as Hearst Magazines, Fox Searchlight Pictures, and theCharlie Rose show.

The settlement, which covers about 7,500 interns who worked at Conde Nast as far back as 2007, will award individual plaintiffs between $700 and $1,900 a piece.

Wal-Mart workers to strike again on Black Friday

Wal-Mart workers said Friday that they will mobilize strikes at 1,600 locations on Black Friday to protest what they say is the company’s “illegal silencing of workers” and to demand higher pay.

The workers’ organizing group OUR Walmart said that Wal-Mart employees and their supporters are planning flash mobs, marches, and prayer vigils across the country to call on the company to pay its workers at least $15 per hour and to provide consistent, full-time work.

What to do with the postal service

\\Two years ago, the U.S. Postal Service raised the price of a stamp by two cents to a whopping 44 cents. Then, talk of five-day delivery service and fewer post offices began to percolate.

What’s next? Full-scale privatization? A buyout by FedEx FDX or UPS UPS? Or perhaps fishing licenses and stamp sales in the same location?

That last one is actually a near-term possibility.

When it comes to saving our mail service, everyone likes to think they have the answer. But making any major changes is more complicated than it seems.

Last month, Congress saved the United States Postal Service from defaulting on its $5.5 billion pre-funding payment for retiree health benefits by granting a reprieve until Nov. 18. Whether that deadline will be extended is uncertain.

In his speech to the Senate last month, Postmaster General Patrick Donahoe warned that USPS would assume an estimated loss of $10 billion by the end of this fiscal year, driven largely by a decline in mail volume and employee compensation and benefits costs. If legislative reform doesn’t come around by September of next year, the postal service will be facing insolvency. And by 2020, Donahoe estimates their debt will exceed $20 billion. (more…)

Next up on the bailout list: The mailman?

The challenge of meeting pension payments is starting to put a huge burden on the San Diego and California budgets, leading many of us to regret that more voices weren’t raised in objection at the time these commitments were quietly made years ago. For that reason, discussion this week of pensions for U.S. postal workers got my attention.

Let me begin with a ground-level personal perspective. Twenty years ago, I used to get 2 or 3 items in each day’s mail at work of varying degrees of importance. Today, there’s essentially nothing I need to see that comes to me at UCSD via the U.S. Postal Service.

And it’s not because I’m a less important guy than I used to be. To my great regret, I now get about 100 times the volume of correspondence that I did 20 years ago. But today it all comes electronically, whether it be letters of recommendation, papers and articles people want me to read, or invitations to secure vast sums from secret Nigerian bank accounts.

From my ground-level perspective, postal mail is a dying industry, at least as far as it’s used in academia. So I had some concerns when the Wall Street Journal ran this strongly worded editorial on Saturday:

With their $15 billion line of credit from Treasury about to be exhausted, postal workers and management are now asking Congress to let them take a pass on $5.4 billion in legally required annual contributions to prepay for retirement health benefits.

While there is honest disagreement about how much should be set aside, the Postal Service and unions essentially want to operate the fund on a pay-as-you go basis– i.e., the same model that has got states like California into fiscal trouble. As funding falls but benefits don’t, pressure will rise to dump those health costs on taxpayers– as General Motors and Chrysler did two years ago.

The position of the Postal Service appears to be that (1) it doesn’t have the money to make the $5.4 billion in payments it is required by law to make this year in order to prefund its growth in pension liabilities, (2) it shouldn’t have to make the payment, since it has already overpayed $75 billion for this purpose in what it describes as an inequitable arrangement, and (3) if the accumulated pension surplus were returned to the Postal Service, it could be better used to help fund health benefits for USPS employees.

The details for the latter arguments are contained in this 2010 report from the Office of Inspector General of the United States Postal Service. Here’s what I learned from the report. In 1971, the Post Office Department of the U.S. government was given semi-independent status and became the U.S. Postal Service. The arrangement was that the federal government would pay pension costs for service through 1971 and the USPS would pay pension costs for service after 1971.

Postal workers are covered by a defined benefit plan, with payments based on salary in the last 3 years of service. One issue in dispute is who is responsible for increased pension costs for workers originally hired prior to 1971 but for whom subsequent pay increases that the USPS has granted since then have resulted in increased pension costs. A second question is the sum actuarially necessary to fund fully the existing pension liability.

I have not investigated details behind the latter argument. But given both the near-term cash flow problems and the deteriorating long-run fundamentals of this enterprise, my prior expectation would not have been that existing commitments to existing employees have been so adequately overfunded that there is $50 billion free just waiting to allocate to rising health costs as well.

Rather than play games with the debt ceiling, in which our representatives try to dodge responsibility for the excess of spending over revenues that they themselves have already passed into law, it would be refreshing to see a thoughtful discussion of exactly what future payments we’re committing the federal government to with the legislation currently being proposed to address postal pension funding.

James D. Hamilton is Professor of Economics at the University of California, San Diego.